An Aptitude for Risk

Think of it this way. For all we do in the industry, from new financial products to long-term strategies, partnerships and technology investments, it’s this simple kind of advance that has the greatest impact on the greatest number of banking customers. The advancements in this case don’t seem revolutionary: There is now new customization in the navigation menus for both Android and iPhone users; there are expanded rewards programs; some users can access their FICO score for free; and you can do it all in Spanish. Many other financial institutions have had similar capabilities for a while now.

But numbers do matter, and here’s a big one. This particular app already has more than 20 million active users, and every one of them will likely benefit from the upgrade.

In banking-related forums like this, there’s a constant focus on how the ‘fintech’ phenomenon is transforming the industry. We endlessly track developing trends in online banking, new releases in mobile payments, facts and figures for app adoption, and so on. To be clear, this is important information. On a related note, it’s absolutely no surprise that many innovations, from individual products to entire company launches, come from outside the industry mainstream. As the industry outlet Motley Fool notes, this is why many industry observers frequently speculate whether institutions in the top tier can be toppled by rivals building on the Silicon Valley model.

Sure, it could happen, and it’ll be fascinating to watch. But for now, we need to understand that as vilified as they are, the big banks have a greater reach than most tech-driven start-ups can even dream about. That’s why app upgrades at these conglomerates deserve attention—they offer vital insights into exactly how tech capabilities, particularly those of the mobile variety, are changing customer behaviour.

Here are some revealing numbers. JPMorgan Chase, the biggest bank in assets, claims nearly 25 million active users for its mobile apps in the most recent quarter. Bank of America, as mentioned above, is a little bit behind with just over 20 million, and Wells Fargo is not far back with 18 million.

But here’s where it gets really interesting. By its own reckoning, the Bank of America app that just got upgraded is 12 times more popular than its branches: Customers used the app an average of 72 million times a week, compared to 6 million weekly visits to the local branch. It’s a similar story with Wells Fargo.

This is a big deal by any measure, but there’s a philosophical issue in there too. Specifically, are consumers doing with the mobile app the same things they do when they visit the branch or the ATM? While this might save the bank a lot in operating costs, can these users be persuaded to perform other functions as well—particularly those that mean new business for the bank involved? And what will it take to get customers to make that leap?

That’s why this market deserve constant monitoring, even as we keep an eye on which features are turning up in tools from smaller financial services providers.

In that context, consider an option like Monese. This European upstart doesn’t even claim to be an actual bank, and yet in less than three minutes you can open a ‘current account’ through which to make low-cost international money transfers, and get a Visa debit card. There’s more: You can even make cash deposits and withdrawals, and store money in multiple currencies. The company, based in London and Estonia, is designed for immigrants and expatriates who have trouble finding financial services outside of their home country.

Of course, it’s all done through the app, which just got an iOS release. The Android version alone has generated 55,000 downloads in a relatively short time, and Monese says it’s seeing 30 percent growth on a monthly basis.

To be clear, it’s a long way from Monese’s 55,000 to Bank of America’s 20 million. But that’s where the real action will be in the near future—when the largest corporations are willing to use mobile apps to offer the kinds of functionality –and take on the associated ricks—that can’t be found at the local branch.